This thesis analyzes the determinants of university enrollment and successful
completion of university studies. The main questions analyzed are: What are
the enrollment effects of different tuition fee schemes? How does taxation of
future earnings affect enrollment? What is the impact of student aid on the
success of studies? To answer the first two questions, I develop a structural
university enrollment model, explicitly accounting for expectations about
future earnings and the associated risk. A high-school graduate enters
university studies if expected lifetime utility from this choice is greater
than from other alternatives. Ex-ante expectation and variance of after-tax
income for German high-school graduates are estimated, accounting for non-
random selection into education and employment. The results indicate that
higher expected returns to an academic education increase, and higher
uncertainty decreases the probability of university enrollment. Based on these
results I conduct simulations to evaluate-ex ante-different funding and
financing policies. First, the impact of recently introduced tuition and
funding schemes on enrollment is evaluated. I then extend the analysis to
three different financing schemes: a pure mortgage loan, income-contingent
loans and graduate taxes, also varying the levels of fees. Second I evaluate
the effect on the expected distribution of earnings in each of the scenarios.
My findings suggest that the introduction/the increase of student fees reduces
university enrollment. This effect can be attenuated by incorporating a
financing scheme where repayment conditions account for future income
uncertainty, i.e. income-contingent loans. Since future earnings are a major
determinant in the university enrollment decision and taxation changes
expectations about the net-return to education, I evaluate the effect of
different taxation schemes on university enrollment. I analyze the effects of
the Tax Reduction Act of 2000, as well as two hypothetical revenue neutral
flat-rate tax scenarios. Here I find that tax schemes with a lower tax rate at
the relevant income segment increase university enrollment. The income effect
thus dominates the insurance effect (in form of a reduced variance in net
income) in all scenarios. The last question focuses on the success of study
measured in two dimensions: the duration of study and the probability of
actually graduating with a degree. Again I consider variation in financing,
here changes in student aid. I estimate a discrete-time duration model
allowing for competing risks to account for different exit states (graduation
and dropout). There are three main results: 1) student aid recipients finish
faster than comparable students who are supported by the same amount of
parental/private transfers only. 2) although higher financial aid does on
average not affect the duration of study, this effect is (3) dominated by an
increased probability of actually finishing university successfully.